Starboard Pressures EBay to Split Off Classifieds Business

(Bloomberg) -- Activist investor Starboard Value is ramping up pressure on EBay Inc. to separate its classifieds business and implement more aggressive operational targets, arguing the e-commerce company has not done enough to improve its performance.

The New York-based hedge fund, which owns more than 1% of the company, wrote in a letter to the management and board that EBay hasn’t done enough in the nearly 12 months since agreeing to review its classifieds business along with ticket reselling business, StubHub, which was sold last year.

“In order to achieve the optimal outcome, we believe classifieds must be separated, and a more comprehensive and aggressive operating plan must be put in place to drive profitable growth in the core marketplace business,” wrote Peter Feld, Starboard managing member, in the letter.

EBay responded in a statement that it has taken steps to improve its performance, including new board appointments. It said it also implemented its first dividend while repurchasing $5 billion in common stock, among other measures.

Last March, EBay agreed to appoint two new directors in a settlement with Starboard and fellow activist, Elliott Management Corp. It also agreed to appoint a third director at a later date and to run a review of its portfolio.

“Our board and management team have implemented changes based on investor input and have taken significant actions to deliver long-term shareholder value and strengthen the business,” EBay said. “Through that lens, we will review Starboard’s letter and perspectives as we continue to rigorously review our business and opportunities for growth and value creation.”

Wenig, StubHub

Since then, the company’s Chief Executive Officer Devin Wenig stepped down in September and the company sold StubHub in November for more than $4 billion to Viagogo Entertainment Inc. Despite these efforts, EBay’s shares have fallen almost 2% in the past year. They were up 0.2% to $34.46 at 1:59 p.m. Tuesday in New York trading, giving the company a market value of more than $27 billion.

Feld said he recognized the company was undergoing a great deal of transition.

“However, we have been disappointed with the speed and lack of urgency with which the operating and strategic reviews have been conducted since their commencement in March,” he said. “We believe management and the board must drive the process to conclusion and commit to a separation of classifieds.”

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Molly Schuetz, Michael Hytha

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